Benefits for Veteran�s with Disabilities

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					Benefits for Veterans with Disabilities
February 2012

A wide range of special cash benefits, medical services and other programs are available for
veterans of the US armed forces who experience disabilities. The programs covered in Unit only
include those administered by the US Department of Veterans Affairs (VA) under its two main
organizational branches: the Veterans Health Administration (VHA) and the Veterans Benefits
Administration (VBA).

          The Veterans Health Administration (VHA) operates the healthcare system serving
           the needs of America’s veterans by providing primary care, specialized care, and
           related medical and social support services. The VHA system includes the VA
           hospitals, the community-based counseling system known as the Vets Centers, and
           all of the special healthcare services available to veterans.

          The Veterans Benefits Administration (VBA) oversees all of the federal benefit
           programs available to veterans and their family members. The programs include
           monetary benefits such as Disability Compensation and Disability Pension as well as
           vocational rehabilitation services, educational assistance, life insurance, home loans
           programs, and other special services.

This unit describes the cash payments provided to veterans with disabilities and offers detailed
explanations about how these benefits interact with SSA disability benefits. For a complete
discussion of employment services and supports offered to veterans with disabilities, refer to
Module 1, Unit 3. For information about healthcare benefits afforded veterans with disabilities,
refer to Module 4, Unit 3.

CWICs must remember that a myriad of additional benefits are available to ALL veterans (not
just those with disabilities) including life insurance, home loan programs and educational
assistance. None of these generic benefits for veterans will be covered in this document, but

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information on these programs may be accessed at the VA website at:

Cash Benefits for Veterans with Disabilities
The VA administers two separate programs which provide monthly cash payments to veterans
with disabilities: Disability Compensation and Disability Pension. This section describes each of
these programs in detail and provides an overview of the disability evaluation system used by
the VA.

A Word about Military Retirement Based on Disability
In addition to the VA benefits described in this document (Disability Compensation and
Disability Pension), military members with 20 or more years of active service (service
retirement eligible) can retire from the Armed Forces as disabled, regardless of the percentage
level of disability, if they are found to be unfit for service by reason of physical disability. People
with less than 20 years of active service at the time they are removed from the military by
reason of physical disability may be either separated or retired, based on a variety of factors.
Veterans who retire from the military due to disability or who are separated due to disability
may receive either monthly cash benefits or lump sum severance pay depending on their
circumstances. These disability payments are part of the military retirement system
administered by the Department of Defense (DoD) and are completely separate and distinct
from the VA benefits described in this section. It is also possible in some cases for a veteran to
collect BOTH Department of Defense military disability retirement payments and VA disability

Taking military retirement by reason of disability has several advantages for those who are
eligible for this option. Individuals who receive military disability retirement are never subject
to a review of their disability rating, and they receive all benefits due to regular military
retirees, including the use of commissaries, military hospitals, as well as TRICARE insurance for
themselves and family members.

When working with veterans, CWICs must first determine which type of benefit is being
received (DoD military disability retirement or VA disability benefits) BEFORE referring to any of
the information in this section, as these two benefits different in several critical ways, including
the monthly payment and how disabilities are assessed for ratings.

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Disability Evaluation Under the VA System
Unlike the SSA system of determining disability using an “all or nothing” criteria, the VA system
uses a disability rating structure in which degree of disability is assessed using percentages.
Individuals may be determined to be disabled anywhere along a continuum ranging from 0% o
100% disabled. The US Department of Veterans Affairs uses something called the “Schedule for
Rating Disabilities” for evaluating the degree of disability in claims for veteran’s disability
compensation, disability and death pension, and in eligibility determinations. The provisions
contained in the VA rating schedule represent (as far as can practicably be determined) the
average impairment in earning capacity in civil occupations resulting from disability. In other
words, a veteran who is assessed at the 30% rating level would be expected to have a 30%
reduction in earnings capacity due to disability. The Schedule for Rating Disabilities is published
in title 38 of the Code of Federal Regulations and can be accessed online at

Total Disability
In addition to the percentage rating system, the VA also designates certain veterans as having
“total disability” and “permanent total disability.” Total disability is considered to exist when
any impairment of mind or body is present which is sufficient to render it impossible for the
average person to pursue a substantially gainful occupation. Total disability may or may not be
permanent. Total disability ratings are generally not assigned for temporary exacerbations or
acute infectious diseases except where specifically prescribed by the ratings schedule. Total
ratings are authorized for any disability or combination of disabilities for which the Schedule for
Rating Disabilities prescribes a 100% evaluation. In certain prescribed circumstances, a disability
rating of less than 100% may result in a total disability rating.

Total Disability Ratings Based on Individual Unemployability
Total disability ratings for Disability Compensation may be assigned in certain cases in which the
schedule rating is less actually less than 100% - the usual standard for total disability. If the
individual with the disability is, in the judgment of the rating agency, unable to secure or follow
a “substantially gainful occupation” as a result of service-connected disabilities, that individual
may be deemed to have total disability for the purposes of VA compensation. VA refers to this
designation as “individual unemployability” and it may occur under the following

              If there is only one disability, this disability is rated at 60 percent or more; or

              If there are two or more disabilities, there must be at least one disability ratable
               at 40 percent or more and sufficient additional disability to bring the combined
               rating to 70 percent or more.

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Specific instruction is provided to VA disability rating adjudicators about how to determine
when a veteran is individually unemployable. The regulations read in the following manner:

“It is provided further that the existence or degree of nonservice-connected disabilities or
previous unemployability status will be disregarded where the percentages referred to in this
paragraph for the service-connected disability or disabilities are met and in the judgment of the
rating agency such service-connected disabilities render the veteran unemployable. Marginal
employment shall not be considered substantially gainful employment. For purposes of this
section, marginal employment generally shall be deemed to exist when a veteran’s earned
annual income does not exceed the amount established by the U.S. Department of Commerce,
Bureau of the Census, as the poverty threshold for one person. Marginal employment may also
be held to exist, on a facts found basis (includes but is not limited to employment in a protected
environment such as a family business or sheltered workshop), when earned annual income
exceeds the poverty threshold. Consideration shall be given in all claims to the nature of the
employment and the reason for termination.”

“It is the established policy of the Department of Veterans Affairs that all veterans who are
unable to secure and follow a substantially gainful occupation by reason of service-connected
disabilities shall be rated totally disabled.” (emphasis added)

[40 FR 42535, Sept. 15, 1975, as amended at 54 FR 4281, Jan. 30, 1989; 55 FR 31580, Aug. 3,
1990; 58 FR 39664, July 26, 1993; 61 FR 52700, Oct. 8, 1996]

The determination of whether or not a veteran is able to follow a substantially gainful
occupation is essentially left up to the Ratings Adjudicator’s discretion with very broad
guidelines. The term unemployability is not synonymous with the terms unemployed and
unemployable for the purpose of determining entitlement to increased compensation. A
veteran may be unemployed or unemployable for a variety of reasons yet still not be
“unemployable” for the purposes of establishing a total disability rating.

Permanent Total Disability
A veteran may be classified as having permanent total disability when the impairment is
reasonably certain to continue throughout the individual’s life. The federal regulations
governing permanent total disability describes the impairments that would qualify for this
designation in the following manner:

 “The permanent loss or loss of use of both hands, or of both feet, or of one hand and one foot,
or of the sight of both eyes, or becoming permanently helpless or bedridden constitutes
permanent total disability. Diseases and injuries of long standing which are actually totally
incapacitating will be regarded as permanently and totally disabling when the probability of
permanent improvement under treatment is remote.

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Permanent total disability ratings may not be granted as a result of any incapacity from acute
infectious disease, accident, or injury, unless there is present one of the recognized
combinations or permanent loss of use of extremities or sight, or the person is in the strict
sense permanently helpless or bedridden, or when it is reasonably certain that a sub-sidence of
the acute or temporary symptoms will be followed by irreducible totality of disability by way of
residuals. The age of the disabled person may be considered in determining permanence.”

                  (From 38 CFR §3.340 Total and Permanent Total Ratings and Unemployability).

The designation of total disability or permanent total disability is important because certain
benefits are only afforded to individuals with these classifications. In addition, designations of
total or permanent total disability may increase the amount of monetary benefits a veteran is
entitled to receive.

Disability Re-Examinations
After the initial disability rating has been made, veterans may be subject to periodic re-
examinations. This is similar to the medical Continuing Disability Review (CDR) process utilized
in the SSA disability benefit system. Reexaminations will be requested whenever the VA
determines there is a need to verify either the continued existence or the current severity of a
disability. Generally, reexaminations will be required if it is likely that a disability has improved,
or if evidence indicates there has been a material change in a disability or that the current
rating may be incorrect. Individuals for whom reexaminations have been authorized and
scheduled are required to report for such reexaminations.

The schedule of reexaminations will vary depending on whether an individual receives Disability
Compensation or Disability Pension. For veterans receiving Disability Compensation,
assignment of a pre-stabilization rating requires reexamination within the second 6 month
period following separation from military service. Following initial VA examination or any
scheduled future or other examination, reexamination, if in order, will be scheduled within not
less than 2 years or more than 5 years within the judgment of the rating board, unless another
time period is elsewhere specified. In Disability Compensation cases, reexaminations are not
deemed to be necessary under the following circumstances:

       1. When the disability is established as static;

       2. When the findings and symptoms are shown by examinations and hospital reports
          to have persisted without material improvement for a period of 5 years or more;

       3. Where the disability from disease is permanent in character and of such nature that
          there is no likelihood of improvement;

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       4. In cases of veterans over 55 years of age, except under unusual circumstances;

       5. When the rating is a prescribed scheduled minimum rating; or

       6. Where a combined disability evaluation would not be affected if the future
          examination should result in reduced evaluation for one or more conditions.

For veterans receiving Disability Pension benefits in which the permanent total disability has
been confirmed by reexamination or by the history of the case, or with obviously static
disabilities, further reexaminations will generally not be requested by the VA. In other cases,
further examination will not be requested routinely and will be accomplished only if considered
necessary based upon the particular facts of the individual case. In the cases of veterans over
55 years of age, reexamination will be requested only under unusual circumstances.

Applying for VA Disability Benefits
Veterans can apply for both Disability Compensation and Disability Pension benefits by filling
out VA Form 21-526, Veterans Application for Compensation or Pension. Individuals should
attach the following material to their application if it is available:

          Dependency records (marriage & children’s birth certificates)

          Medical evidence (doctor & hospital reports)

Veterans can also apply for benefits on line through the VONAPP website. For more information
about applying for VA benefits for individuals with disabilities, call toll-free 1-800-827-1000.

VA Disability Compensation
Disability compensation is a monetary benefit paid to veterans who are disabled by an injury or
disease that was incurred or aggravated during active military service. These disabilities are
considered to be service-connected. The amount of disability compensation varies with the
degree of disability and the number of veteran’s dependents, and is paid monthly. Veterans
with certain severe disabilities may be eligible for additional special monthly compensation. The
veteran’s disability compensation benefits are not subject to federal or state income tax. To be
eligible for disability compensation, the service of the veteran must have been terminated
through separation or discharge under conditions other than dishonorable. To find the current
as well as past VA benefit rates, go to the VA website at:

Veterans with disability ratings of at least 30 percent are eligible for additional allowances for
dependents. This includes spouses, minor children, children between the ages of 18 and 23 who
are attending school, children who are permanently incapable of self-support because of a

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disability arising before age 18, and dependent parents. The additional amount depends on the
disability rating.

Disability Compensation benefits are considered to be an entitlement program and are not
means-tested. Veterans who have other types of income or who own resources will not lose
their entitlement to Disability Compensation benefits. However, the payment of military
retirement pay, disability severance pay and separation incentive payments known as SSB
(Special Separation Benefits) and VSI (Voluntary Separation Incentives) does affect the amount
of VA compensation paid to disabled veterans.

Special Monthly Compensation
VA can pay an added compensation known as “Special Monthly Compensation” or SMC in
addition to the regular Disability Compensation under certain circumstances. For example, SMC
may be paid to a veteran who, as a result of military service, incurred the loss or loss of use of
specific organs or extremities. Loss, or loss of use, is described as either an amputation or,
having no effective remaining function of an extremity or organ. The disabilities VA can
consider for SMC include:

                  Loss, or loss of use, of a hand or foot;

                  Immobility of a joint or paralysis;

                  Loss of sight of an eye (having only light perception);

                  Loss, or loss of use, of a reproductive organ;

                  Complete loss, or loss of use, of both buttocks;

                  Deafness of both ears (having absence of air and bone conduction);

                  Inability to communicate by speech (complete organic aphonia); or

                  Loss of a percentage of tissue from a single breast, or both breasts, from
                   mastectomy or radiation treatment.

The Veterans Administration will also pay higher rates for combinations of these identified
disabilities (such as loss or loss of use of the feet, legs, hands, and arms) in specific monetary
increments, based on the particular combination of the disabilities. There are also higher
payments for various combinations of severe deafness with bilateral blindness. Additional SMC
is available if a veteran is service connected for paraplegia, with complete loss of bowel and
bladder control. In addition, for veterans who have other service-connected disabilities that, in
combination with the above special monthly compensation, meet certain criteria, a higher
amount of SMC can also be considered.

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Finally, if a veteran has a service connected disability at the 100% rate and is “housebound,
bedridden, or is so helpless to need the aid and attendance of another person,” payment of
additional SMC can be considered. This additional monthly payment is referred to as “Aid and
Attendance and Housebound Allowance.” The amount of this extra monthly payment will vary
depending on the level of aid and attendance needed. VA also considers unusual medical
expenses when determining some needs-based pension and compensation payments. Medical
expenses which exceed 5 percent of the maximum annual VA payment rate are considered to
be “unusual.” As a result, the veteran will have a higher monthly VA payment, an extra
payment, or an increase in an extra payment.

VA Disability Pension
A pension is a needs-based benefit paid to a veteran because of permanent and total
nonservice-connected (NSC) disability, or a surviving spouse or child because of a wartime
veteran’s nonservice-connected death. The Department of Veterans Affairs (VA) currently pays
the following three types of pensions:

           Improved Pension, per Public Law (PL) 95-588,

           Section 306 Pension, per PL 86-211, and

           Old Law Pension.

Because the Old Law and Section 306 Pension programs have been phased out, a veteran filing
a new claim for pension benefits must qualify under the Improved Pension program. Pension
beneficiaries who were receiving a VA pension on Dec. 31, 1978, and do not wish to elect the
Improved Pension will continue to receive the pension rate they were receiving on that date.
This rate generally continues as long as the beneficiary’s income remains within established
limits, his or her net worth does not bar payment, and the beneficiary does not lose any
dependents. These beneficiaries must continue to meet basic eligibility factors, such as
permanent and total disability for veterans, or status as a surviving spouse or child. VA must
adjust rates for other reasons, such as a veteran’s hospitalization in a VA facility.

           NOTE: From this point forward, we will refer only to the pensions provided
           directly to veterans based upon disability (as opposed to death pensions
           provided to surviving spouses and children) and will focus on the Improved
           Disability Pension since this is the program currently available to veterans
           making claims. Since there are some differences in the way income and
           assets are counted in the pension programs that have been discontinued, it
           is important to know exactly WHICH pension benefit an individual is
           receiving. CWICs are cautioned to confirm which type of VA pension an
           individual is receiving before offering case-specific advisement!

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Improved Disability Pension
Veterans with low incomes who are permanently and totally disabled, or are age 65 and older,
may be eligible for a type of monetary support known as “Disability Pension.” To qualify for this
benefit, veterans must have 90 days or more of active military service, at least one day of which
was during a period of war. Veterans who entered active duty on or after Sept. 8, 1980, or
officers who entered active duty on or after Oct. 16, 1981, may have to meet a longer minimum
period of active duty. In addition, the veteran’s discharge must have been under conditions
other than dishonorable and the disability must be for reasons other than the veteran’s own
willful misconduct.

Disability Pension payments are made to bring the veteran’s total income, including other
retirement or Social Security income, up to a level set by Congress. Unlike the Disability
Compensation program, the Pension program is means-tested – eligibility is based upon
meeting certain income and asset tests. In addition, Disability Pension payments are reduced by
the amount of countable income of the veteran, spouse or dependent children. Just as in the
SSI program, there are numerous types of income and assets that are disregarded by the VA.
Pension payments may also be reduced by other factors. For example, when a veteran without
a spouse or a child is furnished nursing home or domiciliary care by the VA, the pension is
reduced to an amount not to exceed $90 per month after three calendar months of care. The
reduction may be delayed if nursing-home care is being continued to provide the veteran with
rehabilitation services. The current and past pension rates are available online at:

The VA also evaluates a veteran’s net worth when determining eligibility for the Pension
program. The regulations state that “Pension shall be denied or discontinued when the corpus
of the estate of the veteran, and of the veteran’s spouse, are such that under all the
circumstances, including consideration of the annual income of the veteran, the veteran’s
spouse, and the veteran’s children, it is reasonable that some part of the corpus of such estates
be consumed for the veteran’s maintenance.” (Authority: 38 U.S.C. 1522(a)).

 “Corpus of estate” and “net worth” mean the market value, less mortgages or other
encumbrances, of all real and personal property owned by the claimant except the claimant’s
dwelling (single-family unit) including a reasonable lot area, and personal effects suitable to and
consistent with the claimant’s reasonable mode of life.

In determining whether some part of the veteran’s estate should be consumed for his or her
maintenance, VA will consider the amount of the individual’s income and the following factors:

          Whether the property can be readily converted into cash at no substantial

          Ability to dispose of property as limited by community property laws;

          Life expectancy of the veteran;

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          Number of dependents;

          Potential rate at which the estate would be depleted if used for maintenance; and

          Unusual medical expenses for the veteran and his/her dependents.

With regard to the transfer of property, the VA rules state: “a gift of property made by an
individual to a relative residing in the same household shall not be recognized as reducing the
corpus of the grantor’s estate. A sale of property to such a relative shall not be recognized as
reducing the corpus of the seller’s estate if the purchase price, or other consideration for the
sale, is so low as to be tantamount to a gift. A gift of property to someone other than a relative
residing in the grantor’s household will not be recognized as reducing the corpus of the
grantor’s estate unless it is clear that the grantor has relinquished all rights of ownership,
including the right of control of the property.” (Authority: 38 U.S.C. 501(a))

Concurrent Retirement and Disability Payments (CRDP) for
Disabled Veterans
Concurrent Retirement and Disability Payments (CRDP) restore retired pay on a graduated 10-
year schedule for retirees with a 50 to 90 percent VA-rated disability. Concurrent retirement
payments increase 10 percent per year through 2013. Veterans rated 100% disabled by VA are
entitled to full CRDP without being phased in. Veterans receiving benefits at the 100% rate due
to individual unemployability are entitled to full CRDP in 2009. To qualify for concurrent
retirement and disability payments, veterans must also meet all three of the following criteria:

   a) Have 20 or more years on active duty, or a reservist age 60 or older with 20 or more
      creditable years;

   b) Be in a retired status; and

   c) Be receiving retired pay (must be offset by VA payments).

Retirees do not need to apply for this benefit. Payment is coordinated between the VA and the
Department of Defense (DOD).

Disability Benefit Payment Options
VA offers three payment options to veterans eligible to receive disability benefit payments –
whether it is Disability Compensation or Disability Pension. Most veterans receive their
payments by direct deposit to a bank, savings and loan or credit union account. In some areas,
veterans who do not have a bank account can open a federally insured Electronic Transfer

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Account, which costs about $3 a month, provides a monthly statement and allows cash
withdrawals. Other veterans may choose to receive benefits by check.

The VA Appeals Process
An appeal is a request for a review of a VA determination on a claim for benefits issued by a
local VA office. Anyone who has filed a claim for benefits with VA and has received a
determination from a local VA office is eligible to appeal to the Board of Veterans’ Appeals.

The Board of Veterans’ Appeals (also known as “the BVA” or “the Board”) is a part of the
Department of Veterans Affairs (VA), located in Washington, D.C. “Members of the Board”
review benefit claims determinations made by local VA offices and issue decisions on appeals.
These Board members, attorneys experienced in veterans’ law and in reviewing benefit claims,
are the only ones who can issue Board decisions. Staff attorneys, referred to as Counsel or
Associate Counsel, are also trained in veterans’ law. They review the facts of each appeal and
assist Board members.

Individuals may file an appeal up to one year from the date the local VA office mails its initial
determination on the claim. After that, the determination is considered final and cannot be
appealed unless it involved clear and unmistakable error by VA. Veterans may appeal any
determination issued by a VA regional office (RO) on a claim for benefits. Some determinations
by VA medical facilities, such as eligibility for medical treatment, may also be appealed to the
Board. Veterans may appeal a complete or partial denial of a claim or may appeal the level of
benefit granted.

No special form is required to begin the appeal process. All that is needed is a written
statement that the individual disagrees with the local VA office’s claim determination and
wants to appeal this decision. This statement is known as the Notice of Disagreement, or NOD.
Normally, a veteran files the appeal with the same local VA office that issued the original
decision since this is where the individual’s claims file (also called a claims folder) is kept.

Veterans who are appealing a determination made by the VA should submit any evidence that
supports their argument that the original determination was wrong. This evidence could
include records from recent medical treatments or evaluations or anything else that the
veteran feels supports their contentions. If the individual wants the Board to consider the new
evidence without sending the case back to the local VA office, a written statement to this effect
should be included in the letter requesting the appeal. If this statement is neglected, a
considerable delay may occur as the information will be sent back to the local VA office to

Help preparing and submitting an appeal can be obtained from a veterans’ service organization
(VSO) representative, an attorney-at-law, or an “agent.” Representatives who work for
accredited veterans’ service organizations know how to prepare and present claims and will

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represent veterans. A listing of these organizations is available on the Internet at: Accreditation
Search. Veterans may also hire private attorneys or “agents” to represent them in the appeals
process. The local bar association may be able to provide a list of attorneys with experience in
veterans’ law. VA only recognizes attorneys who are licensed to practice in the United States or
in one of its territories or possessions. An agent is a person who is not a lawyer, but who VA
recognizes as being knowledgeable about veterans’ law.

For more information about appeal rights, how to submit and appeal and a user-friendly guide
to the VA Appeals Process, go to

Other Special Programs for Veterans with Disabilities
In addition to cash benefits, healthcare coverage and vocational rehabilitation services, the VA
offers several special benefits to certain veterans with disabilities. These programs can help a
veteran pay for adaptations needed for a home or vehicle, pay for attendant care or purchase
needed clothing.

Specially Adapted Housing (SAH) Grants from VA
Certain veterans and service members with service-connected disabilities may be entitled to a
Specially Adapted Housing (SAH) grant from VA to help build a new specially adapted house or
buy a house and modify it to meet their disability-related requirements. Eligible veterans or
service members may now receive up to three grants, with the total dollar amount of the
grants not to exceed the maximum allowable. Previous grant recipients who had received
assistance of less than the current maximum allowable may be eligible for an additional SAH

Eligible veterans who are temporarily residing in a home owned by a family member may also
receive assistance in the form of a grant to assist the veteran in adapting the family member’s
home to meet his or her special needs. Those eligible for a $50,000 total grant would be
permitted to use up to $14,000 and those eligible for a $10,000 total grant would be permitted
to use up to $2,000. (See eligibility requirements for different grant amounts.) However, VA is
not authorized to make such grants available to assist active duty personnel.

Eligibility for up to $50,000
VA may approve a grant of not more than 50 percent of the cost of building, buying, or adapting
existing homes or paying to reduce indebtedness on a previously owned home that is being
adapted, up to a maximum of $50,000. In certain instances, the full grant amount may be
applied toward remodeling costs. Veterans and service members must be determined eligible

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to receive compensation for permanent and total service-connected disability due to one of the

       1. Loss or loss of use of both lower extremities, such as to preclude locomotion without
          the aid of braces, crutches, canes or a wheelchair.

       2. Loss or loss of use of both upper extremities at or above the elbow.

       3. Blindness in both eyes, having only light perception, plus loss or loss of use of one
          lower extremity.

       4. Loss or loss of use of one lower extremity together with (a) residuals of organic
          disease or injury, or (b) the loss or loss of use of one upper extremity which so
          affects the functions of balance or propulsion as to preclude locomotion without the
          use of braces, canes, crutches or a wheelchair.

Eligibility for up to $10,000
VA may approve a grant for the cost, up to a maximum of $10,000, for necessary adaptations to
a veteran’s or service member’s residence or to help veterans and service members acquire a
residence already adapted with special features for their disability. To be eligible for this grant,
veterans and service members must be entitled to compensation for permanent and total
service-connected disability due to either blindness in both eyes with 5/200 visual acuity or
less, or anatomical loss or loss of use of both hands.

Supplemental Financing
Veterans and service members with available loan guaranty entitlement may also obtain a
guaranteed loan or a direct loan from VA to supplement the grant to acquire a specially
adapted home. Amounts with a guaranteed loan from a private lender will vary, but the
maximum direct loan from VA is $33,000.

Service-Disabled Veterans Insurance (S-DVI)
Service-Disabled Veterans Insurance (S-DVI) is life insurance for veterans who have received a
service-connected disability rating by the Department of Veterans Affairs. The basic S-DVI
program, commonly referred to as “RH Insurance”, insures eligible veterans for up to $10,000
of coverage. Veterans who have the basic S-DVI coverage and are totally disabled are eligible to
have their premiums waived. If a waiver is granted, totally disabled veterans may apply for
additional coverage of up to $20,000 under the Supplemental S-DVI program. Premiums for

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Supplemental S-DVI coverage, however, cannot be waived. To be found eligible for S-DVI, an
individual must:

          Have been released from service under other than dishonorable conditions on or
           after April 25, 1951;

          Have been notified by VA that they have a service-connected disability;

          Be healthy except for the service-related disability; and

          Apply within two years of being notified of your service-connected disability.

To be eligible for Supplemental S-DVI, an individual must:

          Have an S-DVI policy;

          Have the premiums on the basic coverage waived due to total disability;

          Apply within one year of being notified of the waiver; and

          Be under 65 years of age.

Veterans may be eligible for a waiver if they become totally disabled before the 65th birthday
and remain disabled for at least six consecutive months. Premiums for Supplemental S-DVI
cannot be waived. The cost of the premiums varies depending upon age, type of plan (term or
permanent), and the amount of coverage.

Assistance with Adapting an Automobile to Meet Disability
Veterans and service members with disabilities may be eligible for a one-time payment of not
more than $11,000 toward the purchase of an automobile or other conveyance if they have
service-connected loss or permanent loss of use of one or both hands or feet, permanent
impairment of vision of both eyes to a certain degree, or ankylosis (immobility) of one or both
knees or one or both hips.

They may also be eligible for adaptive equipment, and for repair, replacement, or reinstallation
required because of disability or for the safe operation of a vehicle purchased with VA
assistance. To apply, contact a VA regional office at 1-800-827-1000 or the nearest VA medical

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Annual Clothing Allowance for Veterans with Service-
Connected Disabilities
Any veteran who is service-connected for a disability for which he or she uses prosthetic or
orthopedic appliances may receive an annual clothing allowance. The clothing allowance also is
available to any veteran whose service-connected skin condition requires prescribed
medication that irreparably damages his or her outer garments. To apply, contact the
prosthetic representative at the nearest VA Medical Center.

Veterans Requiring Aid and Attendance or Housebound
A veteran who is determined by VA to be in need of the regular aid and attendance of another
person, or a veteran who is permanently housebound, may be entitled to additional disability
compensation or pension payments. A veteran evaluated at 30 percent or more disabled is
entitled to receive an additional payment for a spouse who is in need of the aid and attendance
of another person.

Subsistence Allowance for Work-Study Participants
In addition to receiving the monthly Disability Compensation payment, some veterans who are
participating in training or education programs may also qualify for a monthly subsistence
allowance. This is paid each month during training and is based on the rate of attendance (full-
time or part-time), the number of dependents, and the type of training. Veterans training at the
three-quarter or full-time rate may also participate in VA’s work-study program. Work-study
participants may provide VA outreach services, prepare and process VA paperwork, and work at
a VA medical facility or perform other VA-approved activities. A portion of the work-study
allowance equal to 40 percent of the total may be paid in advance. View the current VR&E
subsistence allowance rates at

State Veterans Benefits
Many states offer special benefits to veterans in addition to the benefits available from the
Federal government. These benefits may include educational grants and scholarships, special
exemptions or discounts on fees and taxes, home loans, veteran’s homes, free hunting and
fishing privileges, and more. Each state manages its own benefit programs through the State’s
Veterans Affairs Office. A directory of these offices can be found at: The VA also maintains a comprehensive searchable online

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directory of Veteran’s Service Organizations at:

How Employment Affects VA Disability Benefits
The Disability Pension program is means-tested and earned income from employment would
definitely impact a veteran’s eligibility for this program as well as the amount of payment due
each month. In the Disability Pension program, the VA will consider all income from sources
such as wages, salaries, earnings, bonuses from employers, income from a business or
profession or from investments or rents as well as the fair value of personal services, goods or
room and board received in lieu thereof will be included. Furthermore, salary is not determined
by “take-home” pay, but is based on “gross pay” before any deductions made under a
retirement act or plan and amounts withheld by virtue of income tax laws.

In the case of self-employment, the gross income from a business or profession may be reduced
by the necessary operating expenses, such as cost of goods sold, or expenditures for rent,
taxes, and upkeep. Depreciation is not a deductible expense. The cost of repairs or replacement
may be deducted. The value of an increase in stock inventory of a business is not considered
income. A loss sustained in operating a business, profession, or farm or from investments may
not be deducted from income derived from any other source.

Disability Pension is reduced dollar for dollar by any income that is deemed countable under
the VA rules. For example, if a veteran was entitled to a Disability Pension in the amount of
$400 per month and went to work earnings $300 in gross wages per month, the Disability
Pension would be reduced one dollar for each of the 300 dollars received in wages. The
reduced Disability Pension payment would be $100. Veterans receiving Disability Pension are
required to report all income to the VA.

Disability Compensation benefits are not means-tested so they are not affected by income or
resources. Neither wages nor net income from self-employment affects Disability
Compensation payments in the sense that in and of themselves they would cause a reduction
or “offset” in the VA payment amount. Other forms of income (not related to employment) and
assets are also not taken into consideration by the Disability Compensation program and have
no impact on benefit eligibility or amount of monthly payment.

Impact of Employment on Disability Rating
While wages do not cause a reduction in Disability Compensation payments per se, it is critically
important to understand that a veteran’s disability rating is related to his/her ability to work
and earn a living. As the reader will recall from the section describing the VA disability
evaluation system, the percentage “rating” assigned to an individual is directly related to the

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impact which the disability is expected to have on that individual’s earnings capacity. The lower
the rating, the less the disability is expected to diminish the earnings capacity of the individual;
the higher the rating, the more the disability is expected to diminish earnings capacity. It is
reasonable to expect, therefore, that individuals who go to work after the VA establishes their
disability rating evaluation may need to be re-examined or re-evaluated - especially if the
individual engages in “substantially gainful employment.” This level of employment is defined in
rather vague terms in the VA disability benefit manual in the following manner:

            “Substantially gainful employment is defined as employment at which non-
           disabled individuals earn their livelihood with earnings comparable to the
           particular occupation in the community where the veteran resides.”
           (M21-1MR Part IV, Subpart ii, Chapter 2, Section f)

The question then becomes one of how often the VA checks to see if veterans receiving
disability benefits are working and how they determine when an individual is engaging in
“substantially gainful employment.” First of all, there are some veterans who are NOT
monitored at all for changes in employability status, including those who:

           Are 69 years of age or older;

           Have been rated totally disabled due to individual unemployability for a period of 20
            continuous years, or

           Are assigned a 100 % schedular evaluation.

This means that employment even at a substantial level would not cause a reduction of
disability rating for veterans who are elderly (defined by VA as 69 or older), those who have
been determined to have total disability due to individual unemployability (IU) for an extended
period of time (20 or more years), or who have a designation of total disability due to a 100%
disability rating. Obviously this would also include those individuals who have been determined
to have a permanent and total disability. These individuals are in effect “protected” from
having their disability rating reduced and thus are not at risk of losing monetary benefits due to
employment. It seems that veterans who are possibly at risk of experiencing a disability rating
reduction caused by employment are those who have less than 100% disability rating and those
who have had a total disability rating on the basis of individual unemployability (IU) for less
than 20 years. It is possible that these individuals would have their disability rating reevaluated
by the VA if they engage in substantial employment on an ongoing basis.

When the VA conducts an evaluation of employment, they are looking to see whether or not
the veteran is working in a substantially gainful occupation as defined above. Low levels of
employment, which the VA describes as “marginal employment” would not be sufficient to
reduce the disability rating. Marginal employment exists when a veteran’s earned annual
income does not exceed the amount established by the U.S. Department of Commerce, U.S.
Census Bureau, as the poverty threshold for one person. Even when earned annual income
does exceed the poverty threshold, it may still not represent substantially gainful employment

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if the employment occurred in a protected environment, such as a family business, or a
sheltered workshop, or when supported employment services are being provided.

Furthermore, effective January 1, 1985, a veteran’s total disability rating based on IU may not
be reduced solely on the basis of having secured a substantially gainful occupation unless the
veteran maintains that occupation for a period of 12 consecutive months. Temporary
interruptions in employment that are of short duration are not considered breaks in otherwise
continuous employment.

Finally, the fact that a veteran is either participating in a program of rehabilitation or has
completed such a program and is “rehabilitated” would not automatically preclude a finding of
IU. The federal regulations state that caution must be exercised in determining that actual
employability is established by clear and convincing evidence. When the veteran is undergoing
vocational rehabilitation, education or training, the disability rating will not be reduced unless
there is evidence of marked improvement or recovery in physical or mental conditions or
evidence of employment progress, income earned, and prospects of economic rehabilitation,
which demonstrates affirmatively the veteran’s capacity to pursue the occupation for which the
training is intended, or unless the physical or mental demands of the course are obviously
incompatible with total disability. Neither participation in, nor the receipt of remuneration as a
result of participation in a therapeutic or rehabilitation activity shall be considered evidence of
employability. (Authority: 38 U.S.C. 1718(f))

The federal regulations go on to state that if a veteran secures employment within the scope of
a vocational goal identified in the individualized written VR plan (or in a related field), the VA
may not reduce the disability rating by reason of the veteran’s capacity to engage in such
employment until the veteran has maintained that employment for a period of not less than 12
consecutive months. (Authority: 38 U.S.C. 1524(c))

If a reexamination of disability or employability status is conducted by the VA and the lower
evaluation would result in a reduction or discontinuance of disability payments currently being
made, a rating proposing the reduction or discontinuance is prepared which sets forth all
material facts and reasons. The veteran is notified in writing of the VA’s planned action and all
of the reasons and details are furnished in this correspondence. The individual will be given 60
days for the presentation of additional evidence to show that compensation payments should
be continued at their present level. If the individual does not provide additional evidence to the
VA within the 60 day period, final rating action will be taken and the award will be reduced or
discontinued effective the last day of the month in which a 60-day period from the date of
notice to the beneficiary of the final rating action expires. This process is the same regardless of
whether the individual receives VA Disability Compensation or Pension.

Determinations of substantially gainful employment are intended to be highly individualized
and will depend greatly on the unique circumstances of the veteran. VA Ratings Specialists are
directed to consider a wide variety of factors and have clear and convincing evidence before
pursuing a reduction in disability rating. Due to the somewhat subjective nature of these
determinations, it may be impossible to predict exactly when an individual will be considered to

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be in a substantially gainful occupation. Veterans and the WIPA projects serving them are
encouraged to seek a formal determination from the local VA in these cases.

Interactions between Social Security Disability Benefits and
Veterans Disability Benefits
It is possible for certain veterans to receive both a form of disability benefit payment from VA
as well as from the Social Security Administration. Since certain benefits within both of these
systems are means-tested (SSI and Disability Pension) it is possible for receipt of one form of
benefit to affect eligibility for or payment amount due from the other system. The rules
governing how each of the two systems view benefits from the other can be very complex. We
have afforded a general summary below, but when in doubt a formal determination will have
to be sought from the VA or SSA accordingly.

         NOTE: Military service members can receive expedited processing of
         disability claims from the Social Security Administration. The expedited
         process is used for military service members who become disabled while on
         active military service on or after October 1, 2001, regardless of where the
         disability occurs. For information about SSA benefits developed specifically
         to meet the needs of veterans go to:

         SSA also has produced several publications on SSA benefits for wounded
         warriors. These may be found online at:, and

How SSA Disability Benefits are Affected by VA Disability
SSA disability benefits paid under title II (SSDI, CDB, DWB): These benefits are
generally offset by other forms of public disability benefits (PDB) which means that SSA reduces
the monthly payment when other forms of disability benefits are received from a public (i.e.:
governmental) source. While some forms of military disability benefit or a military retirement
pension based on disability may be subject to this offset, SSA does not count Veterans
Administration (VA) benefits (including Agent Orange payments) paid under title 38 U.S.C. This
exclusion covers payments received under both the Disability Compensation and Disability
Pension programs described in this unit. These VA disability benefits are specifically excluded
from offset by law.

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         NOTE: SSA does count military disability benefits including military
         retirement pensions based on disability as a form of public disability benefit
         (PDB) which would be subject to offset. These are benefits paid by the
         Department of Defense, not the VA. It is only disability benefits paid by the
         VA which are exempt from the PDB offset. For more information, see POMS
         DI 52130.001 - Types of Federal Public Disability Benefit (PDB) Payments and
         DI 52130.015 - Military Disability Benefits

Supplemental Security Income (SSI): The SSI program is means-tested and in most
cases, eligibility for SSI and/or the SSI payment amount would be affected by receipt of VA
disability benefits. In general, VA disability payments would be counted as a form of unearned
income for SSI purposes. VA Disability Compensation benefits would count as unearned income
with only the $20 general income exclusion available to reduce the amount of this benefit that
SSI would count. However, the SSI program specifically disregards any portion of a VA Disability
Compensation payment that is a VA Aid and Attendance Allowance or Housebound Allowance
as well as Compensation payments resulting from unusual medical expenses. In addition, there
are certain special Disability Compensation benefits paid on the basis of a Medal of Honor or a
special act of Congress that are also NOT counted as income at all by the SSI program.

VA Disability Pension payments are federally funded income based on need. As such, SSI treats
these payments as unearned income to which the $20 general income exclusion does NOT
apply. Again, SSI disregards VA pension payments resulting from Aid and Attendance or
Housebound Allowances and VA pension payments resulting from unusual medical expenses.
All or part of a VA pension payment may be subject to this rule.

The VA often considers the existence of dependents when determining a veteran’s or a
veteran’s surviving spouse’s eligibility for pension, compensation, and educational benefits. If
dependents are involved, the amount of the benefit payable may be larger than it otherwise
would be. SSA refers to this as “augmented VA benefits.” An “augmented benefit” is an
increase in benefit payment to a veteran or a veteran’s surviving spouse or higher VA income
eligibility limits, because of a dependent. An augmented VA benefit usually is issued as a single
payment to the veteran or the veteran’s surviving spouse. Only the SSI beneficiary’s portion is
considered to be VA income attributable to the beneficiary. The portion of a VA benefit paid by
apportionment to a dependent spouse or child is considered to be income attributable to the
dependent spouse or child. It is not a support payment from the designated beneficiary. For
more information on how SSI treat augmented VA benefits, see POMS SI 00830.314 Augmented
VA Benefits.

The SSI program has numerous rules governing the treatment of other VA benefits provided on
the basis of disability. The following items are specifically excluded as income by the SSI
program in addition to the aid and attendance or housebound allowances and VA pension
payments resulting from unusual medical expenses:

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          Vocational Rehabilitation -- Payments made as part of a VA program of vocational
           rehabilitation are not income (VR&E). This includes any augmentation for

          VA clothing allowance

For more information about how SSI treats specific forms of VA benefit, refer to POMS SI
00830.300 - Department of Veterans Affairs Payments.

Finally, the VA provides numerous educational assistance programs including the Active Duty
Educational Assistance Program (“Montgomery” GI Bill), the Veterans Educational Assistance
Program (VEAP), and the Post-9/11 GI Bill Program. Payments made by the VA to pay for
tuition, books, fees, tutorial services, or any other necessary educational expenses are excluded
from income by the SSI program. Any portion of a VA educational payment designated as a
stipend for shelter is countable income. For more information on how educational assistance
provided by the VA is treated for SSI recipients, go to POMS SI 00830.306 Department of
Veterans Affairs (VA) Educational Benefits.

How VA Disability Benefits are Affected by SSA Disability
The VA Disability Compensation program is not means-tested so it would not be affected in any
way by receipt of a Social Security benefit of any type. Military service members with
disabilities are actively encouraged to apply for disability benefits available from the SSA in
addition the VA benefits.

The VA Disability Pension program is based on need and eligibility for these benefits as well as
the amount of the monthly payment may be affected by receipt of SSA disability benefits.
Retirement, survivors and disability insurance under title II of the Social Security Act will be
considered income for the purposes of VA Disability pension. Remember that VA reduces
pension payments using a dollar-for-dollar approach. Every dollar of SSA title II benefit received
will result in a dollar being taken away from the VA Pension payment. However, the VA Pension
program does NOT count SSI payments as income. SSI is considered to be a benefit received
under a “noncontributory program” (i.e.: a form of welfare) that is subject to the rules
applicable to charitable donations.

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How SSA Treats Income from the Compensated Work Therapy
Compensated Work Therapy (CWT) is a Department of Veterans Affairs (VA) vocational
rehabilitation program that endeavors to match and support work ready veterans in
competitive jobs, and to consult with business and industry regarding their specific
employment needs. The CWT program provides a range of vocational rehabilitation services to
support veterans interested in competitive jobs. There are 5 basic programs offered under

       1. Incentive Therapy Program

       2. Sheltered Workshop Program

       3. Transitional Work Program

       4. Supported Employment Program

       5. Transitional Residence Program

For SSA purposes, most payments from CWT programs are excluded from income entirely since
they are received in conjunction with medical services. Participants in the CWT Supported
Employment (SE) phase of the program are paid directly from local community employers.
Income from CWT SE is considered earned income for SSI and title II disability benefit purposes.

The benefits available to veterans who experience disability are numerous and complex. The
DoD and VA benefit systems are fully as complicated as the Social Security disability system and
in many instances, veterans receive benefits from both of these enormous systems. CWICs
must investigate eligibility for the various types of benefits and encourage veterans to apply for
all programs for which they are potentially eligible. In addition, CWICs must carefully verify
which benefits are received from both the DoD/VA and the SSA systems before offering any
specific advice about how employment might affect these benefits.

Conducting Independent Research
Federal Benefits for Veterans, Dependents and Survivors
A Handbook for Injured Service Members and Their Families
Veterans Benefits Administration Website
Veterans Benefits Explained

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